Venture funding lag costing Illinois jobs

June 27, 2005

BY MICHAEL KRAUSS

The Land of Lincoln is losing the fight for funds. You and your children are going to have a tougher time finding a job as a result.

Here's the score.

Illinois has 4.4 percent of the nation's population. We generate 5 percent of the country's GNP. Since January 2002 Illinois received only 1.5 percent of the venture capital invested nationally, according to a new Private Equity Monitor compiled by the Illinois Venture Capital Association.

Venture investment is the money that goes into entrepreneurial companies. Some companies falter, but a few grow healthy and spawn jobs. Those jobs replace traditional manufacturing jobs migrating to China. Too little venture investment today means too few jobs tomorrow.

According to the IVCA, the $969 million in venture capital that Illinois companies received created 21,160 jobs. If Illinois received its fair share of venture funding, equal to our proportion of the population -- approximately $2.8 billion -- we would have created 62,000 jobs.

Needed: entrepreneurs

The problem isn't just money. Illinois isn't producing enough entrepreneurs.

"You can say there's too little money," says Keith Bank, the new chairman of the IVCA. "We haven't done a great job developing enough investment-worthy deals here in Chicago."

Bank thinks another problem is the absence of home runs: no local Microsoft, eBay or Google to create hundreds of millionaires who become entrepreneurs.

On the plus side, the IVCA documented the problem. "The key to solving any problem is to measure that there is a problem," says IVCA Executive Director Maura O'Hara. "I'm excited that we've done that."

Mark Glennon, vice president of Leo Capital Holdings and co-chairman of the IVCA research committee that compiled the numbers, says, "We do have a deficiency in Illinois. Venture capital is having a very positive effect in Illinois, it simply could be much larger."

BIO 2006 gains momentum

"It will be the biggest BIO show ever," says Jack Lavin, Gov. Blagojevich's point man on economic development and director of the Illinois Department of Commerce and Economic Opportunity.

Lavin spent last week in Philadelphia promoting Illinois and scouting the BIO 2005 trade show. Next April 9 to 12, the global leadership of the biotech industry arrives in Chicago as the Windy City hosts BIO 2006. Lavin expects more than 20,000 visitors; a record 18,000 attended in Philadelphia.

Lavin aims to give BIO 2006 a Midwestern flavor. In addition to traditional pharmaceuticals, Lavin is spotlighting industries that prosper in Illinois, such as makers of medical devices, agriculture and environmental protection. He's bringing Midwestern states together as a block to get VC's to stop flying over our region.

Despite tight budgets, Gov. Blagojevich delivered $1 million in funding to seal the deal to attract the mega show. The city of Chicago is providing $250,000 in support. Lavin predicts a flurry of activity in coming weeks to build interest in BIO 2006. Watch for the business community to step up the pace as Abbott Laboratories CEO Miles White takes the helm as co-chairman of the BIO 2006 mobilization effort.

Lavin is optimistic. "If we do it right, we're going to have tremendous investments in Illinois," he says. The bidding opens soon for the BIO 2010 conference. Lavin is going after that one, too.

Free wireless hot spots

Trips to traffic court aren't all bad. Alex Durr of West Englewood paid his $75 fine. Leaving the Thompson Center plaza, he spied Motorola's seamless technology showcase.

"How many wireless hot spots are there in the city?" asked Chicago's CIO Chris O'Brien from the podium. "Eighty nine," shouted Durr from the crowd.

Close. In fact, 84 free hot spots abound in Chicago. They include the Daley Center plaza, Millennium Park, the Chicago Cultural Center and all the city's libraries.

Durr's guess was the closest. He won a Motorola RAZR phone and Bluetooth wireless headset worth $600.

Bits & bytes

Chicago's losing one of our top tech communicators. Kevin Kutz, head of Burson Marsteller's Midwest tech practice joins Microsoft as communications director leading the global rollout of Longhorn, the new Windows operating system.

Michael Krauss is a Chicago area tech writer and consultant.

 

 ©2005 Marion Consulting Partners